Gilead posts flat quarterly profit, raises full-year outlook

Gilead Sciences reported flat Q2 adjusted earnings of $2.01 per share, slightly above analyst estimates, on revenue up 2% to $7.1 billion. The company subsequently raised its full-year adjusted EPS outlook to $7.95-$8.25 and its 2025 product sales forecast, primarily attributing the upward revision to better-than-expected HIV drug sales, which increased 7% to $5.1 billion, and a strong initial launch of its new HIV prevention drug, Yeztugo, alongside expense discipline.

Analysis

Gilead Sciences presented a mixed but ultimately positive quarter, characterized by flat adjusted earnings per share of $2.01, which slightly surpassed analyst estimates of $1.97, on revenues that grew 2% year-over-year to $7.1 billion. The core driver of performance and optimism is the company's HIV franchise, where sales increased a robust 7% to $5.1 billion. This strength prompted management to raise its full-year adjusted EPS guidance to a range of $7.95-$8.25, with the new midpoint exceeding the current analyst consensus of $8.01. The outlook is further supported by the successful initial launch of Yeztugo, a new twice-yearly HIV prevention drug, with management reporting strong early script uptake and confidence in achieving 90% insurer coverage within a year. However, this growth is partially offset by challenges in other segments; cell therapy sales declined 7% to $485 million due to heightened competition, and the liver disease portfolio saw a 4% sales drop. While the oncology drug Trodelvy posted 14% growth to $364 million, its contribution is not yet sufficient to fully compensate for the declines in larger legacy segments.

Key Decisions for Investors

• Investors should view Gilead's performance as primarily dependent on the continued growth of its HIV franchise, which is successfully offsetting weakness in other areas like cell therapy and liver disease.
• The initial launch success and future adoption rate of the new HIV drug, Yeztugo, are critical catalysts to monitor, as this product is key to sustaining the growth trajectory that underpins the company's raised full-year guidance.
• It is prudent to watch for signs of stabilization or recovery in the cell therapy unit, as persistent declines due to competitive pressures represent a significant headwind against the company's overall growth narrative.